Indian, Chinese ran firm that got ‘dummy directors’ for China-based shell cos, held

Gurgaon: Two directors of a city-based private company, including a Chinese national, have been booked by police for allegedly running a pan-India “dummy director” racket. The duo would provide “dummy” directors to several shell companies based in China to help them set up their operations in this country, police said.
The accused have been identified as Wan Jun alias Alina, the Chinese national, and Dorste, a Himachal Pradesh resident. Both are directors of M/S Jilian Consultants India Private Limited, which has its head office on MG Road. The company was registered in August 2017. Dorste is on the run, while Wan is suspected to be in China, according to police.
An FIR was registered on Thursday against Dorste and Wan Jun under sections 406 (criminal breach of trust), 420 (cheating) 477A (falsification of accounts) and 120B (criminal conspiracy) of IPC and under the IT Act on a complaint from Nitin Phartyal, the deputy director, Union corporate affairs ministry. The complaint was filed after a ministry’s team conducted searches in the company’s Gurgaon office and seized several incriminating documents.
The company’s modus operandi was to facilitate foreign nationals in incorporating companies in India. For this, investigators said, the duo would rope in Indians as “dummy directors” to open the company on the behalf of the foreigners. “The subject company would povide all the logistics for the opening of the company. Besides incorporating the company, it also appointed directors of Indian origin and subsequently, taking their resignations, appointed foreign nationals in their positions, who ultimately were the sole beneficiaries of money routing. They would take help of chartered accountants and Indians,” as per the police complaint.
“The modus operandi was made to bypass a robust system of in-built checks in the ministry before the incorporation of a company by foreign nationals. It appears that chartered accountants who incorporated such companies were having the means to bypass the robust system of incorporation and allow the Chinese nationals to eventually become directors,” the ministry official said in the complaint.